Consultancy charges to us citizen

TDS 739 views 3 replies

Sunil G

Manager HR & Admin

25 Points Joined August 2012

Dear All,

We have one consultant working with us in USA. He is situated in USA and has no connection or office in India. As per the contract between us we have to pay $6K every month as a consultancy charges. So I need your help to understand the following things

1)Wheather he is applicable to TDS in India?

2) Is there any limit in FEMA for allowing us to do outward remittances in such case without deducting TDS?

3) Do we need attach form 15CA & 15CB for every time we do the remittance. Bank is saying if you give us the NIL TDS declaration then we dont need to submit above forms.

4) What other things we need to take care so that there should not be any complications in future.?

Thanks for your help.

Regds

Sunil

Replies (3)

Arihanth Jain

Chartered Accountant

1226 Points Joined February 2010

My views:

1. Taxable as per Income tax Act. However may not be liable as per treaty if NR is an individual/firm.

2. No limit.

3. Form 15cb/ca compliance is needed for each payment. If Order from AO for Nil rate is available then form 15ca alone shall be required.

4. Few suggestions like applying for a PAN for NR etc., can be done.

Sunil G

Manager HR & Admin

25 Points Joined August 2012

Hi,

Thanks for your revert. Some more input to get the clear idea about his Tax liability.

He is US national and working as consultant with our company. I heard from one of the consultant that he is not liable for any tax deduction in India as he dont have any presense in India.

Is it required to submit form 15CA & CB to bank or we can just keep the copy of same if needed for future.

Sorry but I need to understand the rules for doing such outword remittance. If something is needed then I can get it done before its too late.

We have started doing remittances from last month onwards. We are submitting the followings docs to bank. Pls check

1) Request letter for remittance

2) Form A2,

3)Fema Declaration

4) EEFC Declaration

5) NIL TDS declaration/ 15CA/CB

Pls confirm on same. Thanks

Arihanth Jain

Chartered Accountant

1226 Points Joined February 2010

1. What type of Consultancy services are provided? Whether technical or not ? We need to classify these first to determine ultimate tax liability. Just because NR does not have an office in India, does not relieve of tds liability. So we need more facts on these aspects.

2. Documentation seems very fine. Except for the fact Nil declaration, is it from AO? If so then you dont have to comply with 15cb.

Hope these shall be useful. Reach me at arihanthjaing @ gmail.com if you require further clarification.